Calls for an abolition to Inheritance Tax reflect a ‘growing body of
opinion,’ a tax adviser has said.
Stephen Byers, the former Labour minister, called for death duties to be
dropped last week on the grounds that the tax is a penalty on hard work and
Responding to the suggestion, which was met with a furious response from
Brownites, tax advisers said Byers was reflecting the increasing concern with
Maurice Fitzpatrick at Grant Thornton said: ‘Byers is making a point that is
reflecting a growing body of opinion. The question that must be asked is whether
IHT is still doing what it was originally intended to do? The answer is no. It
was intended for the very rich.’
An increasing number of middle class homes are caught up in the duty, payable
on estates worth more than £285,000 at a rate of 40%.
When contacted by Accountancy Age this week, Byers refused to
comment on whether he thought that avoidance schemes associated with IHT were
The tax has for some years been regarded as ‘avoidable’ given the network of
rules allowing gifts and other schemes that can be used to sidestep it.
The Treasury will have been angry with Byers’ comments, not least because it
has been struggling in recent years to plug the gaps.
In the most recent Budget, the government introduced tax charges on trusts,
provoking an outcry that the moves would affect far more arrangements than
John Barnett, a partner at Burges Salmon, said: ‘Trusts are being dealt with
in a discriminatory manner. I would like to see trusts restored to parity since
the government seems to view them as a tax avoidance mechanism, whereas the
majority of trusts are created for perfectly valid family or commercial
Byers’ call means representatives of both parties have now called for an
abolition of the tax, which is opposed by the government. Stephen Timms, chief
secretary to the Treasury, recently said the tax was ‘morally right’.
Tax campaigner, Richard Murphy, said Byers had ‘brought out all the usual
wrong arguments on Inheritance Tax that the right love.’
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